Lolo attends his first IGIA meeting in Washington DC

Gov. Lolo Matalasi Moliga has highlighted some of the issues of serious concern for the territory that he plans to raise during this month’s annual meeting of the Interagency Group on Insular Affairs (IGIA) in Washington DC.

Economic development is at the top of the list, with creating jobs as his administration's key component.

The governor gave a briefing on the issues in his response last month to an invitation from Eileen Sobeck, the Interior Department’s acting deputy assistant secretary for insular areas, who invited the governor, on behalf of US Secretary of Interior Kenneth Salazar, to join the IGIA meeting, which includes governors and congressional members of the Insular Areas as well as officials of federal agencies.

Lolo, along with his wife, two senior aides and a security officer, left last night for meetings in Honolulu and Washington DC. The delegation will return early next month.

ECONOMIC DEVELOPMENT

According to the governor, his administration has made economic development the “number one priority” due to the growing unemployment rate in the territory and the continuing drop in American Samoa’s Gross Domestic Product (GDP), “which is also evident in the comparable decline in our locally generated revenues.”

“The emphasis is on job creating,” Lolo explained. “The initial short term objective is on nurturing existing businesses through the elimination of barriers and government bureaucracy, which diminished business efficiency and profitability.”

He points out that the continued existence of StarKist Samoa — the largest private employer in the territory with a workforce of about 2,000 — is “threatened by the looming risk” connected to the resumption of federally mandated minimum wage hikes in the territory.

The current wage hike delay lasts until September 2015 and Lolo says this matter has become a “disincentive to future investments” by StarKist Co.

“American Samoa needs assistance and support on its plea for reconsideration on the abetment of the application of the federal minimum wage and to revert back to the traditional way our local minimum wage was determined,” said Lolo. The old method reviewed and determined local wages through a special industry committee appointed by the US Labor Department Secretary.

Lolo went on to say that merits of the federal wage application are "indisputable, however, it has been demonstrated that our local economy cannot sustain the adverse financial impact” of the federally mandated wage increases — set by federal law in 2007.

STARKIST SAMOA

“StarKist Samoa has informed me that it will close its tuna pouch production plant in Ecuador [in South America] and American Samoa is the priority site for relocation,” Lolo wrote and cited three potential impediments to this plan that were raised by the cannery.

Those impediments are land availability in the territory, the federal minimum wage law and the federal 30A tax incentive program, which is due to lapse towards the end of this year.

“Microstates like American Samoa lack natural resources to entice investments, however, with federal incentives, American Samoa has been able to maintain the presence of the fish canning industry,” he wrote. “We fear that this capacity will be lost with the absence of the 30A and the Headnote (3a) federal [tax] incentive schemes.”

ECONOMIC INFRASTRUCTURE

Lolo also points out that the territory’s economic infrastructure is cost prohibitive which further reduces its competitive advantage and thwarts its ability to attract outside investment. Additionally, continuing escalation in fuel cost adversely impacts freight rates to the territory and “given our remoteness, this can become a material factor in investment decisions.”

Moreover, the cost of energy spills over to the cost of airfares to and from American Samoa. “Hence our attempts to aggressively promote our tourism industry are impeded. Attempts to secure relief through petitioning for wavier under the [federal] cabotage provision are met with resistance,” he added.

Federal cabotage law prevents foreign carriers from taking paid passengers and cargo in and out of one US airport to another US airport.

Former Gov. Togiola Tulafono had raised the federal cabotage issued during previous IGIA meetings as well as discussions with other federal officials. At last year’s meeting, Togiola told the IGIA meeting that there has not been any analysis of why this policy must continue to hold sway over a major economic development factor for territories such as American Samoa.

He requested a study to make the case that cabotage makes more economic sense to small territories as opposed to opening restricted markets to foreign operators who may jump start and maintain major economic development to small, fledgling economies.

Last October, ASG awarded Washington DC based UBM Aviation the $599,999 contract to carry out an air transport marketing study for the territory and among the issues of the study funded by DOI is the federal cabotage law and possible waiving of provisions to assist the territory in boosting tourism development.

INFRASTRUCTURE SYSTEM

“Our infrastructure system is in dire need to be upgraded,” said Lolo, in his letter, adding that public highways are "grossly deteriorated with potholes causing drivers to negotiate them thus diminishing traffic safety.”

Additionally, airports and ports in the Manu’a island group have deterred development of these islands thus perpetuating the resident's movement to the main island of Tutuila to find employment and to access social services.

Moreover, there is no air service for Ofu and Olosega islands as locally based Inter Island Airways has suspended flights to the Ofu airport due to the airstrip being too short to accommodate its existing fleet.

He said the air strip needs to be extended by 600 feet or more and this is not a new issue, but no commitment has been made to mitigate this shortcoming. He also says the same situation exists with the airstrip at Fitiuta Airport on Ta’u island.

“Without this basic infrastructure, implementation of economic development plans for the Manu’s islands will continue to remain elusive,” he said. He also noted, “The harbors on the islands of Ta’u and Ofu require expansion.”

(Manu’a Sen. Nua Saoluaga said during committee hearings last month that reconstruction and renovation for Ta’u harbor has remained idle for many years despite federal funding having been allocated some ten years ago.)

“We must accelerate our efforts in building our renewable energy capacity to reduce spending on fossil fuel,” said Lolo, who said that he has revived the Renewable Energy Task Force to develop a Renewable Energy Strategic Plan along with the Action plan to facilitate the attainment of this aspiration.

In tomorrow’s edition, Lolo’s discusses the departure of the Bank of Hawai’i, his call for local immigration law reforms, and the current forecast of the ASG deficit.